A blog of Bridge Environment, updated weekly on Thursdays, travel permitting.
Bridge Environment seeks to catalyze a cultural shift in how our society addresses environmental issues. We provide relevant and unbiased advice to any interested party, and also work to educate scientists, policy makers, and the public on how to have a more informative dialog over environmental issues.

Thursday, March 28, 2013

As seen on eBay! In this line of work, sometimes a
6-pack seems like the right tool for the job

Last week, I
introduced the concept of catch shares, a system that assigns percentages
of each year’s annual catch quota to individual fishermen or fishing companies.
I highlighted that catch shares have the potential to address some of the major
challenges we face in fisheries, including the race for fish, unprofitability,
and the ecological effects of stock depletion. I also pointed out that they
raise concerns for many people, for example that they are a conspiracy to hand
a public resource over to corporations, and that they will lead to displacement
of smaller scale fishing operations in favor of a few large players. I left you
with the idea that, in order to understand the value of catch shares, we need
to look at them in the context of the full fisheries management toolbox.

Let me address
one concern about economic consequences and then move on to discuss the
conditions necessary for catch shares to provide conservation benefits. Recall
from last week that the profits that catch shares may provide are returns on
labor or capital investment above market rate. It is not necessarily a good
thing to exclude some fishermen to allow others to profit in this manner.
Moreover, profit comes in two forms. One is efficiency of operations, which are
fairly easy to achieve. These changes are not without negative consequences,
though. One common form of efficiency gain is a reduction in the number of
boats, along with crew. While these changes lead to profits for those who are
lucky enough to get permits, the process can also shut out fishing operations
who are unlucky, particularly small-scale operations that are less likely to be
granted shares and less able to afford to buy them. I’ll leave it to others to
evaluate the presence of a corporate conspiracy, but there is solid evidence to
support the idea that catch shares lead to consolidation of fisheries into the
hands of a few large boats and fewer jobs. The other form of efficiency gain
comes from giving incentives to rebuild stocks, the conditions for which
overlap with those for conservation benefits.

Necessary
conditions for conservation benefits: The conditions for conservation
benefits are pretty restrictive. First, the economics of the fishery have to be
such that they lead to overfishing. Second, catch shares do not operate in a
vacuum, and other management tools are capable of maintaining healthy fish
stocks. In fact, catch shares only work if there is a quota to partition into
catch shares. In order for catch shares to provide conservation benefits, it
must be the case that the catch shares lead to better quota-setting. This point
is crucial and often neglected. In a recent review of catch share programs, two
articles argued that they led to a lower chance of
stock collapse and higher
overall catches. However, both articles only compared catch share fisheries
to non-catch share fisheries, without taking into account other management details,
for example the presence of quotas. Arthur van Benthem and I wrote a rebuttal
article, which can be found here
if you are interested in learning more. In sum, catch shares will improve upon
other forms of quota-setting if economic conditions would motivate overfishing,
if government agencies are susceptible to pressure from the fishing industry, and
if the fishing industry has a short-term focus.

There certainly
are fisheries where the economics would justify overfishing, particularly
because governments often subsidize fishing through policies such as discounted
fuel and tax breaks. These conditions are not always the case. I have worked on
the Caribbean spiny lobster fishery in Colombia, for example, and found that
recent high fuel prices and weak demand have led to stock rebuilding to
extremely healthy levels without any form of restrictive management. Many
governments may also be susceptible to industry pressure. However, I have
greater confidence in the U.S. government than that. They are not perfect in my
eyes, but their weakness is freezing up in the face of uncertainty, not
corruption. I also have confidence in fishermen. Though they are human and we
are all often short-sided, most fishermen have invested their lives into their
occupation. To most, losing their ability to fish would be devastating. When I
work directly with them, they show strong preferences for policies that will
provide long-term security, even if doing so invokes short-term costs. As a
result of my confidence in the U.S. government and in the interests of
fishermen, I do not see catch shares as a silver bullet to help our fisheries.

I am not alone.
Though catch shares have been used in Alaska as much as in any other region of
the US, the regional management council’s own economist believes that their
utility depends on the detailed circumstances, and their effective use requires
careful design and extensive process (Fina
2011). In fact, not all economists agree that property rights are the best
or only solution to the tragedy of the commons. Elinor Ostrom won the Nobel Prize
in Economics in 2009 for work that highlighted the many formal and informal
ways that communities regulate common property resources without official
government intervention. Her thoughts on fisheries can be found here.

Catch shares do
offer potential for improving economic conditions, although not without
negative consequences in the form of inequity and jobs. They also offer
potential to improve fish stocks, although this potential is much more
restricted. For some fisheries, they may offer overall improvements. For
others, they will not. We should not jump to apply them everywhere, as is the
current trend. Nor should we ban them, as was the case in the US in the late
1990s. The principle “use the right tool for the job” applies to catch shares,
just like any other tool.

Thursday, March 21, 2013

Catch shares, also referred to as individual quotas, are a system that
assigns percentages of each year’s annual catch quota to individual fishermen
or fishing companies. The concept has slowly been gaining traction in fishery
management circles, though it still remains highly controversial. Some advocate
catch shares a wonder tool to address all fisheries ills. Others oppose them on
purely ideological grounds. In a two-part blog entry, we will discuss what catch
shares can and cannot do. This week, we will discuss common fisheries problems
and the potential for catch shares to help. Next week we will consider them the
way that every management tool should be, in the context of a full fisheries
management toolbox.

Economists like
to talk about programs like catch shares as a property right, which has led to
the impression that catch shares are tantamount to the public giving up control
of the fishery. In reality, a catch share entitles a fisherman to ownership
over a portion of current and future catches, but ownership of the fish
population and responsibility for setting quotas remains with the public. As
Dan Pauly pointed
out over 15 years ago, people have negative reactions to the concept of
catch shares because of various assumptions, among them that catch shares are
part of a right-wing conspiracy to give the ocean away to big corporations or
that this sort of system will lead to the concentration of a fishery into the
hands of a privileged few while leaving most high and dry. These assumptions
are still widespread today and are major themes of a recent article on catch
shares by Suzanne Rust. Next week, I promise to come back to them.

Let’s first talk
about why catch shares, or property rights in general, are at issue. In short,
economic evidence and common sense dictate that people take better care of
things they own than things that are common property. To describe this
phenomenon, Garrett Hardin coined the term “tragedy of the commons” in an article of that
name published in 1968, although similar ideas were espoused by H. Scott Gordon back
in 1954. The idea that property rights matter to the state of public resources actually
stretches much farther back. There was a political movement that began in late
18th Century England aimed at dividing and privatizing public farming
areas, known as commons. Data suggested that enclosing an area would increase
its value, although thoughtful
analysis published in 1998 by Gregory Clark would suggest that those gains
were modest and mostly offset by the costs of building fences. In fisheries,
the tragedy has three potential consequences, and catch shares can reduce or
eliminate them if certain conditions are met.

Potential consequence #1: In a fishery
without catch shares, competition for a bigger slice of the quota can lead to
inefficiencies. This leads to a phenomenon known as the race for fish. Under
these conditions, fishing operations may race to catch as much fish as possible
before the fleet collectively meets the annual quota. As a result, a fishing
fleet develops that is too big with too much fishing capacity, too few safety
standards, and delivering a product en masse so that prices are low and supply
only available for a short season.

Necessary
conditions: In order for catch shares to address this consequence, there
must be an established annual catch limit but no allocation of that among
vessels. This condition is very different from the ones that motivate catch
shares as a solution for the other two consequences.

An example:
Catch shares have been used effectively in Alaska as detailed in a 2012 paper
by Keith Criddle (see his homepage for
details on several related projects). Previously, Pacific halibut fishing
operations would race to catch as many fish as quickly as possible because the
fishery closed when the annual quota was hit. As a result, there were too many
boats fishing too intensively and recklessly. When this fishery switched to catch
shares, the pace of fishing slowed dramatically. Now, fewer boats catch higher
quality halibut and with far fewer accidents.

Potential consequence #2: An open
access fishery can be unprofitable. Gordon’s 1954 paper on the tragedy of the
commons elegantly lays out the logic behind this idea, and how property rights
may help. When a fishery is open to anyone and healthy enough that it is
profitable to fish, we can expect heavier fishing by existing operations and
new entry by others seeking a share of the profits. The collective increase in
fishing pressure will drive down the fish stock until it is no longer
profitable for anyone. Thought of another way, the incentive to conserve is
negated because anyone making a sacrifice today cannot be sure they will receive
the resulting benefits tomorrow. Thus, people face economic incentives to
heavily fish open access fisheries, to the detriment of the fish stock, their
neighbors, and themselves. Catch shares change this dynamic in two important
ways. First, they prevent new entrants. Second, they change the incentives for
existing fishing operations. Because a catch share applies to the current and
future fishing years, there is now incentive to conserve. This point is subtle.
It is not in anyone’s interest to unilaterally make sacrifices, either by
fishing below their quota or even passing up opportunities to catch more than
their share. However, catch shares do give owners the incentive to collectively
lobby for a quota that would allow for an overfished stock to rebuild.
Conservation interests have taken note of this point and, in many cases, are
the driving force behind the implementation of catch shares in fisheries today.
Their hope is that catch shares will change the incentives of fishing
operations towards more abundant fish stocks.

Necessary
conditions: Here we have a couple of outstanding issues. First, let’s
examine the concept of unprofitability. It’s not as bad as it sounds. Remember
from the theory that people will stop entering the fishery when it’s not worth
their while to do so. Since entering requires some investment in terms of a
boat, fishing gear, permitting, and fuel, not to mention time and energy, we
need to consider someone who is choosing between fishing and an alternate use
of their money and time. The zero profit condition still allows someone to be
paid for their time and investment. Zero profit simply means they will get the
going rate. Second, other management measures matter, but we will cover this
next week.

An example:
Chile has a growing history of
conservation-minded coastal management that has resulted from granting
communities exclusive access to their local fishing grounds. I did a small
project in Chile in the late 1990s when this program was still new and
communities were already celebrating the exclusive access by adopting highly
restrictive regulations for themselves. My favorite dive during that project
was in an area that decided it would only allow a single day of fishing each
year for the highly prized loco, an abalone-like snail. In short, in response
to having control over their local marine resources, Chileans have adopted
plans that include short-term sacrifices which have resulted in long-term
benefits.

Potential consequence #3: When stocks
are driven down to unprofitable levels, they are depleted well below natural
levels, and brings up two conservation concerns: loss of ecological functions
and, in extreme cases, risk of local extinction. These conservation concerns
have led to the coalition that is currently increasing the use of catch shares
in fisheries. They are also the most controversial.

Next week we
will discuss necessary conditions, because they are intimately tied to other
tools in the fisheries toolbox.

Thursday, March 7, 2013

In last
week’s blog entry, I put wild-caught seafood production in perspective and
offered suggestions for how to make it an even more responsible dining choice.
It quickly became my most-viewed blog entry ever. I also got my first comment,
albeit a thinly-veiled advertisement. Please consider adding to the comments,
preferably holding off on any ads, by letting me know why that particular entry
caught your attention. I’d love any feedback that helps broaden the appeal of
this blog.

I ended that entry with a story about pollution posters at a local
elementary school, all of which seemed to carry the message “pollution is bad.”
I didn’t want to single out some 3rd graders in my critique of this
topic so I am not going to show you the kids’ posters. I did find some gems
online, though, presumably made by adults. One, which can be purchased at the
website watermarked into the image, is pictured here è

So, what’s the
problem with teaching that pollution is bad? I mean, it is bad, right? In fact,
it is by definition. Pollution stems from the Latin word pollutio, meaning defilement. Feel free to look up defilement if
you want further proof that pollution is dirty and bad, but I’m guessing your
Safe Search filter may come in handy, particularly if kids are around. In the
end, teaching kids that pollution is bad amounts to nothing more than a
vocabulary lesson.

The problem is
that we all pollute. What a terrible burden to put on a 3rd grader,
no? I’d rather not have it as an adult. If we want to teach about pollution
from a scientific perspective, we can go over the details of how various
activities produce a range of pollutants, and how these pollutants affect the
health of humans and ecosystems. I believe that this was the intention of the
posters I saw, and I am all for that intention. But we shouldn’t forget the resulting
guilt trip, which is not a motivator of good behavior, especially when the best
we can do is to be less bad, not actually good. Since the guilt trip brings us
into the realm of values, ethical considerations are unavoidable when teaching
about pollution.

From an ethical
perspective, our consideration will only be complete if we include an entirely
different perspective: that pollution can actually be thought of as a good.
It’s rarely produced by mistake or out of malice. Pollution is usually a
byproduct of something that we value, whether it be an activity (e.g., driving)
or the production of a good (e.g., apple pie).

You can’t have your car or your apple pie without pollution. Driving
and apple pie are quintessentially American. Are you anti-American? (friends
from other parts of the world, please accept this as a rhetorical question
designed to provoke my American readers, not to provoke you)

In sum, every 3rd
grader pollutes, and the message “pollution is bad” is an inappropriate guilt
trip to put on them. Instead, we should be teaching them that polluting
involves choices and that the details matter. Some pollutants have much more
severe effects on people or the environment than others. Also, we should keep
in mind that one person’s trash is another’s treasure. Most pollutants eventually
break down and are resorbed by the environment. They do vary in the amount of
time this process takes, though, which is another important consideration.

Let’s face
it—pollution is complicated. Whether educating young kids or discussing public
policies, we’d be better off if we avoided the classic pitfalls of ignoring pollution
or treating it like it is evil. Teaching about pollution will invariably lead
kids to be concerned about the negative effects. Leaving them with the simple
concept that pollution is bad does them a disservice, and we can do better. Does
this discussion sound a lot like my perspective on fisheries regulations? It
should. The new mindset that Bridge Environment is advocating would serve us
well in addressing virtually every environmental issue.

Next week, I
will be working on location on St. Thomas and will make a blog entry if I can.
If so, I may talk more about my work there on fisheries. If you have other
ideas you would like me to address, feel free to make suggestions.